Research On Value Chain Accounting Of Integrated Agro-industrial Enterprises

Since famous professor Yan Dawu put forward value chain accounting by combining the theory of value chain and accounting in 2003, Chinese scholar launched a series of studies around it. However, no studies have ever clarified how enterprises should establish value chain accounting system; what value chain accounting should provide added value information for internal managers; how enterprises use information provided by value chain accounting to plan strategy, gain and sustain competitive advantages. Meanwhile, with the development of China’s agricultural industrialized organization model and the worsening food quality and safety condition, the growing number of agricultural industrialized leading enterprises transform the model from purchasing the farmers’agricultural products to providing agricultural products by their own bases, namely agricultural industrialized leading enterprises value chain expends from the processing of agricultural products to agricultural production. This dissertation names them as integrated agro-industrial enterprises. In this dissertation, the author chooses value chain accounting of integrated agro-industrial enterprises as the mainly research theme. It can not only enrich value chain accounting theory researches, but also be applied directly to the improvement of integrated agro-industrial enterprises accounting system; promote scientific level of enterprises value management methods and provide the reference for the improvements of general enterprises accounting system and scientific method of value management.The dissertation starts from characteristics of integrated agro-industrial enterprises to research the value chain accounting framework of integrated agro-industrial enterprises, including integrated agro-industrial enterprises value chain model and added value mechanism; integrated agro-industrial enterprises value chain accounting; integrated agro-industrial enterprises value chain cost analysis; integrated agro-industrial enterprises analysis reporting; integrated agro-industrial enterprises value chain performance evaluation, by using normative research and empirical analysis. The main purpose of this dissertation is to explore value chain accounting to service added value of the integrated agro-industrial enterprises, to make accounting better service to develop strategic planning and to make enterprise gain and maintain sustainable competitive advantage. The main contents and findings are presented as follows:1. Integrated agro-industrial enterprises’ concept, current situation and development trend.This dissertation defines integrated agro-industrial enterprises as economic organization with legal personality, based on agricultural production, extending to agricultural industry chain of the prenatal inputs for agricultural production or the agricultural harvest postpartum processing, storage, transportation, sale, forming vertical integration within enterprises value chain and being independent accounting, self-management, self-financing. The integrated agro-industrial enterprises are characterized by integration on natural reproduction process of agricultural activities and reproduction process of industrial enterprises, integrating agricultural industry value chain to become the internal organization, integration on added value of agricultural industry chain and integrated agro-industrial enterprises, integration on scale production, diversified management and business management, transforming contract prices of agricultural non-market transactions into agro-industrial integration value chain transfer price. This dissertation analyzes current situation of China’s integrated agro-industrial enterprises with integrated agro-industrial enterprises in Shandong province as a case study; and outlines integrated agro-industrial enterprises’ development trend, namely circular economy of internal value chain, standardization of production, the use of scientific and technological innovation, the whole processes quality control traceability, depth, diversity, group, inter-regional development, establishing brand and using network to self-marketing.2. The basic framework of value chain accounting.This dissertation argues that value chain accounting is not only a branch of management accounting and the core part of strategic cost management, but also further development based on strategic cost management. Traditional accounting and the value chain accounting exist in many different areas, so there are differences between the traditional accounting data and the value chain accounting data as analysis required. Therefore, accounting should face this challenge and convert from the "traditional accounting" to the "value chain accounting" of strategic direction to provide analytical data for strategy planning, gaining and maintaining sustainable competitive advantages. This dissertation constructs the basic model of value chain accounting by identifying enterprise value chain, value chain accounting analysis, value chain cost analysis and value chain performance evaluation.3. Value chain accounting system of integrated agro-industrial enterprises.This dissertation discusses in detail the specific content of value chain accounting system of integrated agro-industrial enterprises by using the basic framework of value chain accounting, including five specific areas:(1) Value chain model of integrated agro-industrial enterprises.The drivers and features of integrated agro-industrial enterprises value chain require integrated agro-industrial enterprises to develop sustainable agriculture. Customer-driven and strategic-pulling are the two major sources of added value of integrated agro-industrial enterprises. Value chain model of integrated agro-industrial enterprises consists of two parts:one is value chain activities of integrated agro-industrial enterprises, including primary activities and support activities; the other is the main flow of value chain primary activities of integrated agro-industrial enterprises, including agricultural production, harvesting & transport, primary processing & storage, secondary processing, distribution & package, retail, consumer’s household and waste management.(2) Value chain accounting analysis of integrated agro-industrial enterprises.Value chain analysis is the basic method of value chain accounting analysis. Value chain accounting analysis of integrated agro-industrial enterprises is a sustainable value chain analysis based value chain analysis. Using the food value chain analysis, this dissertation proposes seven steps to integrated agro-industrial enterprises value chain accounting analysis by value stream management, case studies and action research as basic tools.(3) Value chain cost analysis of integrated agro-industrial enterprises.Value chain cost analysis and traditional cost systems are significantly different in cost concept, classification, accumulation, allocation. So it is needed to establish value chain cost analysis system to provide useful financial data and operation data for the value chain accounting analysis, performance evaluation and strategic planning. As the integrated agro-industrial enterprises cost analysis has the characteristics of a wide range of cost, the complex links and relationships between value chain activities, special cost drivers of value chain and the heavy workload of the value chain cost analysis, they determine, the value chain cost analysis of integrated agro-industrial enterprises is more complex than that of other companies. We can build value chain cost analysis of integrated agro-industrial enterprises from financial accounting recording system, business analysis recording systems, databases and accounting and analysis reporting.(4) Value chain accounting and analysis reporting of integrated agro-industrial enterprises.Value chain accounting of integrated agro-industrial enterprises is implemented according to product, value chain activities, processes, jobs, tasks, and assets. The staff who perform specific value chain tasks record assets and allocate asset by the cost drivers of the value chain task. The revenue of integrated agro-industrial enterprises refers to the output value of value chain activities, processes, jobs in the form of their daily activities. It should be recognized output value at fair value. In addition, natural added value of biological assets should be recognized as the revenue of integrated agro-industrial enterprises at fair value. We can build value chain accounting analysis reporting of integrated agro-industrial enterprises from asset cost structure, value chain activities cost structure, value chain processes and added value.(5) Performance evaluation of integrated agro-industrial enterprises.The SCOR model is a hierarchical model which consists of different process levels, so this dissertation applies AHP with SCOR metrics to construct a value chain performance hierarchical metrics of integrated agro-industrial enterprises. In this dissertation, the TOPSIS applies to normalize the values that have different units while AHP is adopted to determine criteria weights to carry the strategic weights to operational metrics and used in normalization, and the follows TOPSIS procedures and achieves the final ranking of the different scenarios.